PM Shehbaz rejects FBR’s tax proposals for Budget 2024-25

ISLAMABAD: Prime Minister Shehbaz Sharif Saturday rejected two important tax proposals of the Federal Board of Revenue (FBR) for the budget of the upcoming financial year 2024-25.

According to the sources, the FBR had proposed an increase in sales tax on various items at 18 to 19 percent and on petroleum products at up to 18 percent aimed to collect billions of rupees in taxes from tax proposals.

However, the prime minister rejected the FBR suggestions and directed the Chairman of FBR to prepare alternative proposals, sources added.

Furthermore, Sources within the finance ministry said that the International Monetary Fund (IMF) had also suggested imposing a sales tax on petroleum products in the recent negotiation, but the government suspended the tax in March 2022.

The federal government is already charging petroleum development levy of Rs60 per liter on petroleum products instead of sales tax.

Pakistan’s federal budget for the upcoming fiscal year (FY2024–25) is likely to be unveiled on June 7, with total expenditure expected to reach Rs 16,700 billion.

According to preliminary estimates, the expenditure on interest and loans will be around Rs 9,700 billion, while subsidies are estimated at Rs 1,500 billion.

Tax revenue is projected to exceed Rs 11,000 billion, with direct taxes expected to generate Rs 5,300 billion and federal excise duty Rs 680 billion. Sales tax is expected to generate over Rs 3,850 billion, while customs duty is expected to generate over Rs 1,100 billion.

Non-tax revenue is estimated at Rs 2,100 billion, with the petroleum levy expected to contribute Rs 1,100 billion. Sources further said that the federal budget deficit is likely to be around 9300 billion rupees.